It would be very easy each week to write that the pace of regulatory change is getting faster and faster. But the reality is that we’re only just out of the first week in July and already it’s off to a frenetic start.
Admittedly, some of the change that’s happening this month has been planned for a while. But this doesn't lessen the burden on firms when it does come around. The work still needs to be done.
So what’s making July such a hectic month? Take a look at the list below and you’ll find the answer there.
The start of the new complaints regime
The industry eagerly awaits the FCA’s policy statement on the new complaint handling regime expected to be introduced next year. But in the meantime, the FCA has prioritised the implementation of the relevant pieces of the Alternative Dispute Resolution Directive, under which the Financial Ombudsman Service (FOS) has been appointed as a certified entity by the FCA (the letter can be found here).
What this means is that from 9 July, firms have to declare whether they would allow complainants to approach the FOS before or instead of the firm handling the complaint. They also have to declare whether they are prepared to waive the statutory time limits for allowing complaints to be referred to the FOS. If the response is no, there are some standard words in the complaints handbook that need to be included in response letters where the complaint is received on or after 9 July. Not a big piece of work on its own, in fact the most important thing is to remember to do it in time.
More (or less) compensation
Firms also have to get to grips with the changes to the limits set under the Financial Services Compensation Scheme. In short, these limits are going down for deposits and up for insurance.
But it’s the insurance change that’s being dealt with first. With effect from 1 July, the compensation limit for insurance has been increased to 100% of cover for long-term insurance business and for professional indemnity insurance.
So there’s another change that has to be incorporated. Because reference to the FSCS is a requirement for key features documents, all of these will need to have been updated, not to mention references to the limits on firm websites, in call scripts etc.
Clear up your call charges
This one is coming a little more from left field for financial services firms, and potentially is one that could have been missed. But, also with effect from the start of the month, for firms offering customers the option of contacting them via numbers beginning with 08, the core components of the cost of each call must be clearly disclosed. This is because of new rules introduced by Ofcom, the telecommunications regulator.
The two components are the access charge (which is the bit that the customer’s phone provider charges them) and the service charge (which is the bit that is set by the firm the customer is calling).
Again, this all went live on 1 July. If you want to learn more, you could do worse than invest a couple of minutes in watching the video on this page.
And that’s before we get started on the Budget
Last Wednesday’s Budget speech certainly contained lots of changes – but the one that the pensions industry will need to get to grips with quickly is the reduction in the annual allowance for higher earners. That one will require changes to disclosures, customer communications, procedures and possibly systems as well. And this comes at a time when the industry is still getting to grips with the pension changes from last year. The most recent development here being the finalisation of the rules for pension transfers and for policies with guaranteed annuity rates (GARs). The latter, particularly the issue of how to value policies with GARs, is set to run for a while yet before being finalised.
Followed by the consultations
There are also two particularly key consultation documents that firms might wish to consider responding to.
The first of these is the FCA’s Discussion Paper issued right at the end of June, headed Smarter Communications, which I went into detail about in a previous post, so I won’t repeat myself here.
The second one though, is the one released just after the Budget speech, in which HM Treasury is seeking submissions on its proposals to change the system of tax relief for pensions, to make it simpler and to encourage greater levels of saving. Potentially this could mean another pensions revolution which will affect everyone in the industry. The window for having your say is now open, but it is relatively small, so it’s important to act now.
What this has to do with training
The answer is nothing specifically – there are no courses that I could obviously point you too that would cover the knowledge needed on each of these points. But anyone would admit, there’s a lot of stuff to deal with at the moment from a regulatory perspective, and that’s just looking at July. So given this rapid pace, the questions I have are:
1. Are your staff suitably equipped to process and deal with an ever-increasing regulatory agenda?
I’m not just talking about the compliance and risk functions here – I’m talking about everyone – because it’s important that all staff understand what regulatory change means for them, and their roles. Simply because if mistakes are made or points misunderstood, this could have serious implications. Perhaps this is the time for some in-house training or for some staff to take qualifications.
2. Are the controls teams equipped to deal with this level of change?
Another CPD point, but the value that can be gained from attending seminars and training events cannot be underestimated in this environment. Not just directly from the training materials, but the networking and sharing of knowledge with other delegates can be hugely valuable.
What should you do?
I’d recommend two things:
Firstly, start your search for training events here – you’ll be surprised what’s on offer and how easy it is to find what you’re looking for if you have something in mind; and
Secondly, sign up here to keep up to date with new training offerings – make it as easy for yourself as possible.
Good luck with the changes – let’s hope August is a bit quieter!
By Martyn Oughton a Professional Member of the International Compliance Association (ICA). Martyn now writes a regular blog for Industry Events Online focusing on the importance of training in all aspects of compliance. Read Martyn's other publications at Martyn's Writers' Residence website.
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